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Making the digital economy more inclusive

Making the digital economy more inclusive

Across the world, there is an inescapable sense that the machines are coming, and they’re going to take our jobs.

This fear is not new. From the cotton gin, to the tractor, to the assembly line and beyond, jobs have faced and will continue to face threats from technological advances.

But throughout these disruptions, large-scale unemployment has typically been avoided: either machines could not do many of the innately human things people could do, or technology so drastically brought down costs that new markets were unlocked, in turn requiring more workers to serve new customers. Today, both these factors are playing out across sub-Saharan Africa.

Africa commands a meagre 1.5% share of the world’s total manufacturing output, and the low number of jobs available in manufacturing is, in part, leading to the growth of service-based employment. Technology is rapidly reducing the cost of serving consumers across industries as diverse as financial services, transportation, and hospitality – and is allowing products and services that were traditionally only accessed by the privileged few to reach a wide pool of new customers.

Greater internet and mobile penetration, the development of online market places, and changes in user and consumer behaviour are creating technology-enabled business models across the continent. It is precisely at this juncture that technology can be used to create job opportunities for Africa’s burgeoning youth population.

New ways of working are required

With youth unemployment in major African economies such as South Africa and Nigeria reaching upwards of 50%, new forms of working are required to meet the needs of a worryingly inert labour force. As traditional jobs become scarcer in increasingly competitive job markets, the digital economy can support the livelihoods of entrepreneurial individuals seeking to provide services to new customers in new ways.

A growing body of evidence is highlighting the job-creation potential of the digital economy. Since mid-2013, Uber has created over 4,000 economic opportunities for driver-partners in South Africa. The firm states that 1,000 such opportunities were created in both Nigeria and Kenya since launch around two years ago, and it forecasts over 3,000 more for Nigeria in the next year.

Giraffe, an on-demand recruitment app in South Africa, has attracted over 200,000 jobseekers since launching in 2015, placing thousands of them with hundreds of South African businesses. E-retail is also set to boom: an estimated 90% of internet users in Nigeria either currently shop online or expect to do so in the near future, with 60% of Kenyan and 70% of South African users reporting the same sentiment.

But such work is not without its risks. Workers in the digital economy typically lack the job security and stability that comes with full-time employment, making their livelihoods more flexible but also more fragile. Uber has come under public and regulatory scrutiny in many Western countries for undermining the labour rights of its driver-partners, who are technically independent but often rely solely on the platform for their incomes.

Despite these risks, for the millions of struggling work seekers throughout sub-Saharan Africa, perfect employment should not be the enemy of a good living. As smartphones and data become more affordable, and more people become digitally literate, the growth of digital livelihoods across Africa is inevitable.

Eliminating various tech and non-tech barriers is crucial to making the digital economy more inclusive. For example, zero-rating job sites so users aren’t charged for data costs – as Vodacom has done for Giraffe in South Africa and Facebook’s Free Basics has done with Jobberman – makes job seeking and applying cheaper. Free Wi-Fi initiatives, such as Project Isizwe in South Africa, and Rwanda’s Smart Kigali initiative, can also help.

Municipalities can help online workers avoid challenges of poor connectivity and unreliable power by creating and supporting business and tech hubs for digital entrepreneurs. Ghana, Nigeria, Kenya, and a host of other African countries are building these ecosystems with increasing government support.

Relevant content and greater emphasis on digital literacy and language skills would help increase local demand, while also allowing users and online workers alike to better utilise digital applications. The development of world-class platforms such as Jobberman in Nigeria, SweepSouth for domestic workers, and IDWork for construction artisans in South Africa are exemplifying the calibre of local innovation and how technology can solve tangible local problems in the labour market.

Coupled with reliable, secure, and inclusive payment systems, lower transaction costs can expand opportunities for un- and underbanked groups. And affordable financing can help workers acquire tangible productive assets such as phones, computers, and cars.

Our conception of work must change

For workers and policymakers alike, there are good reasons to worry about the impact of technology on jobs. Yet if history is any guide, harnessing the power of new technology to reach new consumers will present tremendous opportunities for digital work and entrepreneurship. But to realise these opportunities our conception of work must change, if the work itself is to follow suit.

Diptesh Soni is a consultant in the Johannesburg office of Dalberg Global Development Advisors, a strategic advisory firm dedicated to global development.

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